A $14 million retrofit of a proposed Nestlé water-bottling plant has ground to a halt after the city of Sacramento issued a stop-work order while investigating whether the work began before the company had legal authorization from the city.

Late Friday afternoon, the city's Community Development Department issued a stop-work order for Phases II and III shortly before an interim or "urgency" ordinance request was added to the City Council's agenda for Tuesday night. The council is being asked to consider amending the city's zoning code to immediately require special permits for beverage bottling plants. The meeting starts at 6 p.m.

On Monday, City Councilman Kevin McCarty and officials from the city's Community Development Department were trying to determine when Nestlé Waters North America began interior renovation of an industrial warehouse being leased for a new water-bottling operation.

"We're still assessing all the facts," said David Kwong, acting director of the city's Community Development Department. "We're trying to make sure there's nothing being done out of the ordinary."

Legally, construction cannot begin before a start-work authorization or building permit is issued, he said.

A building permit for Phase I was issued Oct. 7, but no start-work authorization has been found, Kwong said, adding that a start-work authorization was issued for Phase II the same day. 

"I don't know if there was an authorization to work for Phase I," he said.

Phase I included foundation work and moving walls, Kwong said. Phase II involves work on water and drainage lines and other operational needs. However, the company's description of the work to be done appears to overlap in the two documents. 

Nestlé maintains the company has not done anything illegal.

"Nestlé Waters is in compliance with the city's building and permitting laws," Brendan O'Rourke, the company's supply chain director and national director of natural resources, said in a written statement. He arrived in Sacramento on Monday to help respond to the unfolding situation.

Phase I construction is complete, the company said. Nestlé began work two months ago and is halfway through renovation of the plant at 8670 Younger Creek Drive, Chris Kemp, Nestlé's Sacramento plant manager, said Wednesday.

"To date, the company has invested more than $3.7 million into this plant in form of permitting fees, construction costs, due diligence payments and costs associated with the movement of equipment from other Nestle Waters plants to Sacramento," read an e-mail from Nestlé on Monday.

The stop-work order may be temporary. A draft ordinance was still being finalized by the city attorney's office late Monday afternoon. The draft goes to council members before being made public, said Amy Williams, spokeswoman for the city manager's office.

The council ought to carefully consider commercial requests to bottle and sell city water, said City Councilman Kevin McCarty, who requested the item be placed on the agenda and later posted a story about his decision.

"Water is increasingly one of more most precious and valuable resources," McCarty said Monday. "My proposal would mandate a further dialogue on all future water-bottling facilities. I think it's an important discussion to have."

Changing the process now would be "troubling," O'Rourke said.

"We have followed the city and state laws throughout this process, invested more than $3.8 million into this facility and hired people to work, all based on the the current law and it would appear that this is an attempt to change those laws midstream," he said. "We find that prospect troubling not only for this plant, but for any business looking for certainty in the siting process."

Nestlé also questioned the legality of the stop-work order. The company said the stop-work order may not be legal because the city already had issued a start-work authorization for Phase II.

"The city has not provided any evidence to support this stop-work order despite the rules that require they do so within 24 hours," said O'Rourke.

The city gave Nestlé preliminary authority to start work on Phase II, but that doesn't give the company the right to continue the work. In addition, no building permit was issued for Phases II and III, said Sheryl Patterson, senior deputy city attorney.

"We do have the right to issue a stop-work order when no building permit has been issued," she said.

An interim ordinance, which would not require review under the California Environmental Quality Act, would give the city time to consider a formal amendment to the zoning code. An interim ordinance requires a super majority or two-thirds vote of the council, to pass, Patterson said.

Nestlé has paid the city $65,000 in permitting and application fees. The company also agreed to hire local contractors and has committed to paying them $600,000 for their work.

Nestlé applied for a building permit through the city's Facility Permit Program in order to make tenant improvements, including underslab plumbing, demolition of existing partition walls and construction of new ones.

Questions also are being raised over whether it was correct to use the Facility Permit Program in this instance. "The Facility Permit Program facilitates a rapid approval process for tenant alterations and improvements of commercial and industrial facilities: minor tenant improvements, including maintenance, repair and minor alterations; and major interior tenant improvements and remodels. This includes tenant improvements to new and existing structures," according to the city's Web site.

"I'm not sure if it all adds up," McCarty said.

Suzanne Hurt is a staff reporter for The Sacramento Press.